Making Sense

The median forecast for CPI Headline U.S CPI 3.10% yoy and 0.43% mom Core CPI 3.70% yoy and 0.32% mom The details of the CPI release are tabled below. Core CPI mom at 0.40% is actually unwounded at 0.358%. Fed Fund pricing shifted from 91 bps to 86 bps at the time of writing and US2Y is 4.616% (10 bps off lows) and US10Y is trading at 4.157% (7.60 bps off lows). USD index trades at 103.17. Post NFP, DXY had traded a low of 102.36. Core Services inflation rose 0.46% mom following a 0.66% mom rise the prior month. Last 12 months core services inflation has been up at an average pace of 0.43% mom and Core goods inflation rose 0.11% mom.  The data does not change expectations much but ofcourse supports the case of a cautious Fed.   We now wait for the PPI data on thursday for estimates of PCE and more importantly the Fed projections for PCE numbers and FFR.

"STARTING STRONG IS GOOD. FINISHING STRONG IS EPIC." This is the first article I am writing this week post the higher-than-expected CPI inflation print from India and the US.  Data Release: US CPI rose 0.5% in January on a seasonally adjusted basis following an upward revision in Dec data to 0.1 % from -0.10%. Headline CPI rose 6.4 % before seasonal adjustment against market consensus of a 6.20% reading. Core CPI rose 0.40% mom, services (excluding energy services) rose 0.50% mom, shelter rose 0.70% and transportation services rose 0.90% mom. The food index increased 0.5 % mom. Interesting point to note - Egg price index rose  8.5% mom on account of Avian Flu, high cost of feed and transportation etc. In the US , a dozen eggs cost INR 400 / INR 33.33 per egg. Compare that to India where 1 egg costs Rs. 7. The energy index increased 2.0 % mom. The rent index and the owners' equivalent rent index each rose 0.7% mom while the index for lodging away from home increa...